The Supreme Court in a ruling Monday allowed the Consumer Financial Protection Bureau to continue operating, but said that the director of the consumer watchdog could be removed by the president of the United States "at will".
"Instead of placing the agency under the leadership of a board with multiple members, Congress provided that the CFPB would be led by a single director, who serves for a longer term than the president and can not be removed by the president except for inefficiency, neglect or malfeasance".
Established after the financial crisis, the role of CFPB president was created to protect the bureau's independence and its statute said the president could remove its director only for cause, defined as "inefficiency, neglect of duty or malfeasance". The court's four liberals agreed, though they disagreed the restrictions were improper. Kathy Kraninger, named by Trump to head the agency, took office in 2018 over the objections of Democrats and consumer advocates. That structure could leave a new president with a director chosen by the previous president for some or all of the new president's time in office. We therefore hold that the structure of the CFPB violates the separation of powers.
"Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control".
Roberts Jr. wrote the majority opinion.
As Justice Elena Kagan wrote in a dissent, "Today's decision wipes out a feature of that agency its creators thought fundamental to its mission - a measure of independence from political pressure".
The bureau, the brainchild of former Democratic presidential candidate Elizabeth Warren, has been politically polarizing, with Democrats citing a need to combat financial-industry excesses and Republicans warning of runaway government regulation.
Sen. Elizabeth Warren (D-Mass.) speaks during a protest in front of the Consumer Financial Protection Bureau headquarters in Washington on November 28, 2017.
Warren defended the CFPB on Twitter noting that even after the supreme court ruling it remained an "independent agency".
"The director of that agency still works for the American people". One of those was from the Washington Legal Foundation, which urged the court to rule in the manner in which it eventually did.
The law firm, which specializes in resolving consumer debt issues, sued in response to a 2017 CFPB request for information and documents during an investigation into whether it had violated federal consumer financial law.